Payroll Tax Cut Extension: Obama Says He Would Veto House GOP Bill

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By ALAN FRAM

Posted:
12/13/2011 8:01 am EST
Updated:
02/12/2012 5:12 am EST

Speaker of the House John Boehner (R-OH) holds a press briefing outside of his offices at the U.S. Capitol December 12, 2011 in Washington, DC. Boehner said he expects the House to vote on legislation that would extend unemployment benefits and payroll tax breaks and funds a large, cross-country oil pipeline project. (Photo by Chip Somodevilla/Getty Images) | Getty Images

WASHINGTON — The White House promised a veto Tuesday for a Republican bill renewing a payroll tax cut next year for 160 million workers, complaining that spending cuts that pay for the measure would whack the middle class and require no sacrifice from the rich.

The threat came as the House began debating the bill, which would also extend long-term unemployment benefits and prevent a cut in Medicare payments to doctors. The GOP-led chamber was expected to approve the legislation later Tuesday, though it was virtually certain to die in the Democratic-run Senate.

Obama had previously objected to a provision in the bill forcing work on a proposed oil pipeline that would stretch from Canada to the Gulf Coast, which Obama wants to delay. Tuesday's veto threat was more strongly worded and broadened his objections to the bill's unfair treatment of low- and middle-income earners, a theme that has become a dominant one for Democrats as the two parties position themselves for next year's elections.

"If the president were presented with H.R. 3630, he would veto the bill," the statement said, referring to the number of the legislation.

Republicans said the legislation underscored their effort to create jobs and said the Senate could not simply ignore the legislation.

"The Senate can take up our bill and amend it, or they can pass their own bill. But they can't continue to shirk their responsibility to govern. America can't wait," said Michael Steel, spokesman for House Speaker John Boehner, R-Ohio.

The White House statement said the measure, whose price tag exceeds $180 billion, "seeks to put the burden of paying for the bill on working families, while giving a free pass to the wealthiest and to big corporations by protecting their loopholes and subsidies."

Democratic versions of the legislation, backed by Obama, would have been largely paid for by boosting taxes on people earning more than $1 million annually, a proposal Republicans have ignored.

The House legislation is partly financed by requiring higher earners to pay larger premiums for Medicare and preventing the wealthy from collecting jobless benefits and food stamps.

But far more savings come from other proposals, including extending a pay freeze on civil servants and forcing them to contribute more to their pensions, paring some spending under last year's health care overhaul and boosting fees that federally run Fannie Mae and Freddie Mac charge for backing mortgages.

"This debate should not be about scoring political points. This debate should be about cutting taxes for the middle class," the White House statement said.

Republicans say that by forcing work on the Keystone XL pipeline and blocking a proposed federal rule curbing some industrial pollution, they can encourage employment at a time when the economy remains on its knees.

"You can't be for the middle class" and oppose the tax cuts and job creation the bill contains, said House Majority Leader Eric Cantor, R-Va.

"Mr. President, we can't wait," Cantor said. "That's why we are putting forward this bill to make sure that we are there for the middle class of this country."

Senate Majority Leader Harry Reid, D-Nev., accused Republicans of adding "ideological candy" to the legislation, a reference to the oil pipeline, and catering to tea party conservatives. Obama has promised to reject any bill containing the Keystone language, which would give the administration 60 days to approve a permit for work to begin.

Obama said last month that work on the 1,700-mile pipeline, slated to run from Alberta, Canada, to Texas, needed to wait for studies on how to avoid damaging environmentally sensitive lands in Nebraska. The postponement would allow the White House to sidestep a pre-election dispute that has pitted business and labor unions against environmentalists.

Democrats complain that the bill does not do enough for unemployed people coping with one of the worst U.S. economies in decades. The bill prevents extra benefits for the long-term unemployed from expiring on Jan. 1, but would gradually wind down maximum coverage to 59 weeks, well below the current 99-week ceiling.

The measure would make other changes in the unemployment program, including giving states the right to administer drug tests to applicants for benefits.

The bill would retain this year's 4.2 percent Social Security payroll tax rate paid by workers in 2012, preventing it from popping back up to its normal 6.2 percent on Jan. 1 if Congress doesn't act. Obama got Congress to reduce the tax a year ago in an effort to leave more money in peoples' wallets and prod the limp economy, and GOP leaders pushing to renew the tax break next year have had to overcome objections from some Republicans who say it has done little to revive the economy.

The legislation would also prevent an automatic 27 percent cut in Medicare reimbursements for doctors in January, a reduction that could force some to stop treating Medicare patients. Instead, their reimbursements would rise by 1 percent each of the next two years.

The measure includes a range of other provisions, including language blocking a proposed Environmental Protection Agency rule curbing industrial pollution; preventing illegal immigrants and others who lack Social Security numbers from collecting the children's tax credit; and stopping welfare recipients from using their electronic benefit cards to pay at casinos and strip clubs.

Republicans would largely finance their bill by extending the pay freeze on federal workers for another year through 2013, and forcing them to contribute more to their retirement plans; raising the fees the government-run Fannie Mae and Freddie Mac charge lenders to back their mortgages; gradually charging higher-income seniors more for their Medicare premiums; and selling portions of the broadcast spectrum.